Uniting the divided world order
Reviving multilateralism will require structural changes to cope with regional powers, an empowered civil society, and multinational corporations
Multilateralism is fraying at the edges. While global problems, requiring effective global coordination, abound, multilateral cooperation has been gridlocked recently. The World Trade Organisation (WTO) was driven to irrelevance by the collapse of the Doha trade round in 2008. The last successful global trade talks were held in Uruguay, almost 23 years ago. While multilateral relevance in trade talks seems questionable, the world has forged ahead with a cluster of regional and bilateral trade agreements such as the Transatlantic Trade and Investment Partnership and the Trans-Pacific Partnership. Isolationist populism has thrived — when Donald Trump speaks about a 45 per cent tariff on foreign goods, he is perceived to represent blue-collar workers. Immigration worries cloud the horizon. Even geopolitical competition is gradually eschewing multilateral institutions. China’s rejection of the Permanent Court of Arbitration’s decision in the South China Sea case, despite signing up to the United Nations Convention on the Law of the Sea, along with Russia’s absorption of Crimea, shows changes in the global order. The march of liberal democracy and free trade, in tandem, in lockstep with global institutions, has seemingly stopped.
Towards regionalism
This shift towards greater regionalism is not new; globalisation has broken down before. The British Free Trade system, established by 1860 (post repealing Corn Laws in 1846), replaced the protectionist state of the late 18th-19th centuries with cheap imports of food and raw materials for industry. This saw Britain’s agricultural and industrial sectors being subjected to intense competition while subsidies were done away with, stimulating a service economy and promoting British liberalism. With protectionism rising in Europe, free traders instead sought the imposition of “free trade” in the colonies and India.
This shift towards greater regionalism is not new; globalisation has broken down before. The British Free Trade system, established by 1860 (post repealing Corn Laws in 1846), replaced the protectionist state of the late 18th-19th centuries with cheap imports of food and raw materials for industry. This saw Britain’s agricultural and industrial sectors being subjected to intense competition while subsidies were done away with, stimulating a service economy and promoting British liberalism. With protectionism rising in Europe, free traders instead sought the imposition of “free trade” in the colonies and India.
The First World War combined with the rise of the U.S. and Germany as manufacturing powers soon reversed this order. World trade was split into imperial trading blocs. This liberal retreat was soon characterised as the victory of fascism and communism amidst the ruins of social democracy.
Declining openness
Multilateralism’s rise was the product of unique post-war factors such as American hegemony combined with a post-war consensus on the benefits of democracy. Its decline remains structural. Multilaterals have continued to remain self-servingly rigid, their memberships with associated power hierarchies inflexible — for instance, India’s struggle to gain its rightful place at the UN Security Council. Such institutions have also increasingly become prone to conflict instead of consensus, with gaming of system through votes and agenda dilution. The rise of rival institutions — the Asian Infrastructure Investment Bank in response to the World Bank, the Shanghai Cooperation Organisation in response to NATO and the G-7 — have all hogged aid resources while standing as tombstones to an eschewed past. Meanwhile, developed societies have changed, embracing individualism over social democracy — the trend towards atomisation continues apace.
Multilateralism’s rise was the product of unique post-war factors such as American hegemony combined with a post-war consensus on the benefits of democracy. Its decline remains structural. Multilaterals have continued to remain self-servingly rigid, their memberships with associated power hierarchies inflexible — for instance, India’s struggle to gain its rightful place at the UN Security Council. Such institutions have also increasingly become prone to conflict instead of consensus, with gaming of system through votes and agenda dilution. The rise of rival institutions — the Asian Infrastructure Investment Bank in response to the World Bank, the Shanghai Cooperation Organisation in response to NATO and the G-7 — have all hogged aid resources while standing as tombstones to an eschewed past. Meanwhile, developed societies have changed, embracing individualism over social democracy — the trend towards atomisation continues apace.
Something similar to pre-war liberal retreat is afoot now. The European welfare state, once a model of social constitutionalism, is fraying at the edges, unable to cope with an influx of immigrants, refugees, and rise in inequality. Globalisation, once sold as offering promising service economies to the citizens of the West, has stalled in lieu of a hollowed-out manufacturing sector. Transatlantic multilateral institutions have failed to manage global challenges such as global warming and financial instability. Global powers are no longer a cosy club. The West has had its energy sapped by the European crisis, the morass in West Asia, and domestic political gridlock.
Subsequently, faith in “single undertakings” associated with multilateral institutions has dropped, with bilateral diversification being considered as offering better deals through regional economies, that offer broad access to deep market, while balancing free trade with social goals. Multilateralisation is increasingly perceived to be a straightjacket, in cahoots with great powers and industrial lobbies. Consider agriculture. The past half century has seen a rise in agricultural subsidies in developed countries, with trade negotiations seeing countries operate in a mercantilist model, loath to give up subsidies that foster their farmers. Developing countries, with significant agricultural surplus produced at low prices, find market entry barred on various grounds. Instead, preferential trade agreements have developed a momentum of their own.
What history teaches
In the long view of history, multilateralism remains surprisingly rare. The Peace of Westphalia sought to end the Thirty Years’ War in the Holy Roman Empire. The Westphalian treaties established the principle of ensuring peace through a democratic congress, while establishing a new political order in Europe based on national sovereignty. The end of the Napoleonic wars in Europe saw the establishment of the Concert of Europe, with the great powers redrawing European borders peacefully at the Congress of Vienna. The First World War destroyed this European Concert — its replacement was the farcical League of Nations. The post-World War II world saw the creation of a new world order, sustained by a cornucopia of multilateral and supranational institutions such as the United Nations, the International Monetary Fund and the World Bank. This post-war liberal order was the product of an institutional response to social conflicts stemming from the working class and its interaction with raw capitalism. As with the 1900s, this liberal order is seemingly in the process of being shrugged off. Reviving multilateralism with new players will require structural changes in the world order, which will have to cope with a diverse set of regional powers in addition to an empowered civil society, multinational corporations, and transnational flows by HNIs. The trade-off between deepening globalisation and a country’s sovereignty and democracy will have to be rethought, all while managing the complex problems left over from yesteryear. Great power rivalry needs a new mechanism to manage conflict. The decline of multilateralism leaves uncertainty in its wake. The dividing world order will take decades to settle.
In the long view of history, multilateralism remains surprisingly rare. The Peace of Westphalia sought to end the Thirty Years’ War in the Holy Roman Empire. The Westphalian treaties established the principle of ensuring peace through a democratic congress, while establishing a new political order in Europe based on national sovereignty. The end of the Napoleonic wars in Europe saw the establishment of the Concert of Europe, with the great powers redrawing European borders peacefully at the Congress of Vienna. The First World War destroyed this European Concert — its replacement was the farcical League of Nations. The post-World War II world saw the creation of a new world order, sustained by a cornucopia of multilateral and supranational institutions such as the United Nations, the International Monetary Fund and the World Bank. This post-war liberal order was the product of an institutional response to social conflicts stemming from the working class and its interaction with raw capitalism. As with the 1900s, this liberal order is seemingly in the process of being shrugged off. Reviving multilateralism with new players will require structural changes in the world order, which will have to cope with a diverse set of regional powers in addition to an empowered civil society, multinational corporations, and transnational flows by HNIs. The trade-off between deepening globalisation and a country’s sovereignty and democracy will have to be rethought, all while managing the complex problems left over from yesteryear. Great power rivalry needs a new mechanism to manage conflict. The decline of multilateralism leaves uncertainty in its wake. The dividing world order will take decades to settle.
Feroze Varun Gandhi is a Member of Parliament, representing the Sultanpur constituency for the BJP.
Keywords: Multilateralism
Source: The Hindu, 18-08-2016
